Disruption and noise?

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DOC has taken on a new meaning, but dealers need to be ready for the road ahead

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DOC IN THE CAR BUSINESS is an acronym most commonly referred to as daily operations control document produced by your DMS.

Having just been to the Automotive News World Congress, NADA and the CADA Summit, I believe DOC has a new meaning for auto retailers as we wade into the business waters of 2015.

During the first 45 days of 2015 I heard much talk about Disruption, Optimism and Caution (“DOC”) from the myriad of industry pundits who openly and freely advise dealers on how they should navigate the road ahead.

I can’t help but think back to 1998 and 1999 when significant disruption was predicted by the dot-com predictors on the day. The dealer body handled that threat successfully.

Now, disruption has taken on a different meaning. It seems to have a more solid foundation. Disruption seems to stem from five competing but interconnected forces, namely Brands, Ownership, Technology, Customers and Harassment.

Brands are positioning themselves firmly in between the customer and their dealer partners.  This disrupts any momentum built by the dealer in forging local customer relationships as the age old battle rages on to answer the question, “who’s customer is it?”

Once again the answer to this question is being turned upside down.  Brands are also increasing their ask from dealer partners to spend more and more money on facilities, systems and customer facing programs, often with a cloudy outcome on their dealer partners’ ROI.

Ownership is certainly up in the air as new entrants appear in our market. Highly publicized, Berkshire Hathaway has dipped its toes into seemingly warm US auto retailing waters. Those involved are finding that for some brands, approval waters are uncomfortably cold.

In Canada, the public ownership model waters continue to be frozen. New money is attempting to tiptoe around the edges by trying to enter the ownership sphere of auto retailing.

They too may find that with certain brands, some ownership models are icebergs floating in those seemingly warm waters.

However, dealer succession continues to be a significant industry issue. At this point in time, dealer exit options in Canada are fewer in number than those available to dealers in other parts of the world.

Technology is adding tremendous stress to the dealer network.  Technology providers and outsiders fuel much of this stress.  However, much of the confusion stems from the fact that the technology acceptance gap has widened.

Unlike the dot-com era of the last century, today’s expectations are being driven by real customers. With dealership ownership controlled  largely by baby-boomers, shopping patterns of the millennials are becoming quite foreign to current dealership decision makers.

The reality is that those millennials are redefining retailing, and keeping up is downright challenging for many dealers.

Customers come in all shapes and sizes from both the traditional world and the virtual world.  We are all pretty good at serving the customer in the traditional world, however, the virtual world is throwing us for a loop.

How can you deal with someone who does not want to enter your showroom until the last step in that person’s vehicle buying process, if at all?  It’s hard for us to throw away the old seven or nine step sales processes.  After all, that’s our comfort zone, our sweet spot.

Customers are reshaping our sales processes as they demand us to behave more like Amazon and Apple.  Online is the millennial’s life lifeline, but for many dealers, online is an anchor.

We are trying to convert everyone into the traditional world and refuse to give up our old ways.

Harassment seems to be coming from all directions.  In these unsettled times and seemingly at every turn, disruption is rearing its ugly head.

As if brand, ownership, technology and customers were not enough with which to keep up. Regulators, our local market leaders and outsiders influencers along with world political and economic activities all seem to be ganging up on dealers, nipping at our heels to move along a little faster, or sometimes go a little slower, depending on the day and with whom you are interacting.

As a group, dealers are optimists but it is certainly hard to be perpetually optimistic when day-to-day business challenges are elevated to the harassment level within some circles.

I have always believed that auto retailers were among the best entrepreneurs in the business world.  I still do today, more strongly than ever.

As the outside world and unfortunately some of the inner sanctum wait for us to botch things up, as a group we must rise and surpass the challenges that are being presented to us.

Some of the disruption is systematic.  Either collectively as a whole or collectively within the specific brands we represent, I believe strength comes in numbers.

Brands, dealer councils and dealer associations will need to be at the top of their game, playing rich, deep and active roles in leading and responding to those disruptive ingredients that harass and challenge our very being.

Going forward will require collaboration on many issues and on many fronts.

However, I also believe we are in control of our own destinies.  Daily, in every local market across Canada, dealers face the challenges of successfully operating their complicated businesses.

After all, how many other local entrepreneurs operate as many capital intensive interrelated businesses in an environment of multiple single purpose competitors?

How many are playing with their own money within the terms and conditions of elaborate dealer agreements and with only very limited influence of the products and services they offer?

That being said, disruption does not mean that things are broken.  Actually, reality shows quite the opposite.

Disruption in many ways is caused by noise overload. We all need to take time to work on our businesses, not just in them. Stepping away to think about broader strategies and tactics is extremely important.

I would go as far to say these regular sessions have become a best practice in managing dealerships today and instrumental in separating the relevant messages from the high volume of noise.

Just like we rely on our operational DOC on a daily basis as a vital management tool, we must pay attention to the noise barrage in the form of informational DOC, disruption, optimism and caution.

We must respond to and integrate the valuable sound bites provided from the noise that are applicable and relevant to our individual and collective businesses.  We then must respond to them by amending and updating how we go to market.

The CADA Summit provided an opportunity to hear from some of the credible noise-makers both inside and outside of our direct retail industry.

The discussions were robust, relevant and timely.  As we take time to work on our businesses, attending events like the Summit provide a valuable forum to dealers and help dissect the noise by turning it into valuable and actionable information.

Many outsiders are once again waiting for dealers to botch things up, but we all know that we are not going to let that happen.

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Canadian auto dealer